Southwestern Connecticut's housing market grew exponentially in 2013, and a regional brokerage firm predicts the area will build on that momemtum this year, albeit at a slower pace.

Sales of single-family houses and condos jumped about 20 percent in each of the four quarters of 2013, ending the year with a gain of 22 percent versus 2012, which translates into a 28 percent increase in dollar terms, according to a report by William Pitt-Julia B. Fee Sotheby's International Realty.

The double-digit improvement persisted despite fiscal uncertainty and rising interest rates, according to the firm, which serves Fairfield and Litchfield counties, the Connecticut shoreline, Westchester County, N.Y., and Berkshire County, Mass.

The improvement in housing prices was dizzying in some communities. In Redding, the median sale price in the fourth quarter was $626,000 -- 41 percent higher than in the same period of 2012. In New Canaan, the median sale price surged 26 percent to $1.5 million.

`Realistic expectations'

William Pitt Sotheby's attributed much of the strong market to job expansion on Wall Street, larger bonuses, and rising confidence in the economy that encouraged people to buy, rather than rent.

"2013 was the year when buyers and sellers alike were realistic in their expectations," said Bill Larkin, sales manager at the firm's New Canaan office. "We were particularly encouraged to see the high-end buyer emerge. With the continuation of favorable market conditions projected for 2014, we believe it will be another strong year for Fairfield County real estate, and one where some of our over-inventoried segments will see more meaningful levels of activity."

Mid-county communities such as Brookfield, Redding, Ridgefield, Sherman and Weston had the highest growth rates, Pitt-Sotheby's reported, citing cost of living and lifestyle as contributing factors. Westport and New Canaan sales overall were hit hard by the recession, but now are benefiting from pent-up demand.

That demand resulted in the impressive sales jump in 2013 as buyers rushed to lock in purchases as rates on a 30-year fixed mortgage climb from the mid 4 percent range, but Paul Breunich, CEO and president of Pitt-Sotheby's, is not expecting quite the same pace of purchases this year.

The median price of a home in Greenwich rose 8 percent to $1.72 million last year. In Stamford the figure was 3 percent higher at $561,000; Westport's median price also gained 3 percent, to $1.24 million; in Danbury, it climbed 2 percent to $252,000, while Brookfield surged 17 percent, the biggest gain in the county year over year, to $372,000; the Bridgeport median home price was $132,500, a 3 percent increase; and in Trumbull the number rose just 1 percent to $353,000.

"Prices in Danbury were up almost as much as in the south (in percentage terms). That shows the overall strength we're going through," Breunich said.

Like Breunich, Nicholas Perna, chief economist for Waterbury-based Webster Bank, does not believe mortgage interest rates will dramatically rise during 2014, commenting that high interest rates can stifle the economy.

The Federal Reserve "doesn't want to stop housing growth. It's one of the things we have going for us," he said. "Real estate has a fairly substantial multiplier effect."

New home construction and improvements made to a newly purchased existing home result in the purchase of building materials, home improvement products and furnishings.

For many buyers, value was the byword as they sought out well-priced properties in good condition and in a good location.

"We believe that we are in a housing market that is stronger and more sustainable than it has been for five years, and one that will continue to improve in 2014," said GiGi Melillo, brokerage manager of William Pitt Sotheby's International Realty's Darien and Rowayton offices. "This year will be the third of our local housing recovery, and we expect that exceptional home affordability and rising demand will support continued growth in all of our market areas."

New homes

Sales of newly constructed homes -- described as homes less than two years old -- totalled $1.2 billion in the county in 2013 -- up 150 percent over 2012.

Robert Morey, regional director for Northern Fairfield County RE/MAX Right Choice in Newtown, has seen the improvement up close.

"2013 was a very good year. My business was up 18 percent. The seeds of recovery were blooming," Morey said, adding distressed properties have been a drag on the market but are slowly declining in number. "2014 should be a good year because of the overall strength of the economy."

With the improvement in the economy, homebuyers are willing to test the housing market, despite rising mortgage rates, according to Morey, who said the National Association of Realtors and the Mortgage Bankers Association have predicted that rates for a 30-year fixed mortgage will be in excess of 5 percent in the first quarter of 2014 -- up from a rate in the low 4 percent range in the last quarter of 2013.

A rate in the 5 percent range is still low, according to Morey,

"It's like taking a large candy bar away from a baby and giving him a small one. It's still delicious," he said.

Rose Warmingham, a sales associate with the Fairfield office of Coldwell Banker, agreed there has been an improvement in the distressed housing market, and she also sees continued growth in 2014.

"People are still being cautious," said Warmingham, commenting that the cold winter weather has not dramatically deterred home buyers. "Between Thanksgiving and today, there is activity out there. It's more active than I've seen in past years."